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Monday, April 01, 2013

Health Costs

From the Daily Yonder:

The problem with escalating health-care costs is actually pretty simple.

The people who make decisions about medical costs (doctors, hospitals, insurance companies, drug companies, device manufacturers) have a vested interest in seeing us spend more money on health care, not less. More money in the system means more chances for them to grab a share.

The one player in the game with the power and interest to control medical costs is Medicare. Medicare has so much market power that it can buy care at reasonable prices. Patients have a powerful advocate, and it’s very popular with beneficiaries. It has its own center for experimenting with better pay incentives to health care systems to get better care for more people at lower cost. (Hospitals don't get paid when they let things go wrong.) If Congress would permit it, Medicare could bargain for drugs at reasonable prices and pay only for devices that have been proven to work. But Congress will not.

Even though Congress won’t let a plan like this move forward all at once, what if we looked for a way to phase in this solution over time? 

Medicare vs. Private Insurance Increase 
Chart shows growth in per capita costs in Medicare and private insurance. Medicare has done a better job of holding costs down. (Data from Centers for Medicare and Medicaid Services.)
First, let’s look at the various players in the current system and the specific problems they face. Then, we’ll come back to the solution...
 Good read.


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